24 Dec 2011: Ambani’s Reliance Industries found to make Covert Investments

FTSE 100 5513 Up 102bp
S&P 500 1265 Up 90bp
NIFTY 50 India 4714 Down 42bp

Major Stories

  • Ambani’s Reliance found to make Covert Investments
    • Conglomerate controlled by Anil Ambani used a Mauritius-based (called Pluri Cell E) fund to make covert investments in one of its own companies, violating the Indian law
    • UBS facilitated use of this vehicle; they’ve already been fined in 2009 for compliance failings
    • Pluri Cell E had bought equity swaps, whose underlying shares referenced one Reliance company
    • UBS claim they were unaware that the conglomerate was being controlled by Ambani
  • Gilt Yields fall
    • 10-year bond UK government bond yields fall to 1.99% sparking fears of double-dip recession
    • Govt hopes to ‘pass on’ low borrowing costs to households and make borrowing and spending more attractive to boost short-term economic demand
    • Pensioners and savers are dependent on Govt bond income so this affects them; interest rates may stay at 0.5% until even 2014
    • Lowest levels since the 1890s
  • Libya’s Oil production to recover
    • Libya pumping more than 1 million barrels/day
    • They were pumping about 1.6mn per day before the armed uprising against Qaddafi
    • Country is confident of raising its production to 2mn barrels per day in the next 3-5 years

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